Buying or selling a healthcare practice is a significant financial and professional decision. The transaction can affect your ownership, patients, employees, contracts, liabilities, and ability to operate the practice after closing.
Jackson LLP represents healthcare professionals and practice owners in practice sales and purchases. Our attorneys review the proposed transaction, conduct legal due diligence, negotiate the terms, and prepare or review the agreements needed to complete the sale.
Whether you are purchasing an established practice or preparing to sell one you have built, we can advise you on the legal issues that matter before and during the transaction.
Buying a Healthcare Practice
An established practice may come with an existing patient base, employees, equipment, contracts, goodwill, and other assets. Before you purchase, however, you need to understand exactly what you are acquiring and whether the practice has legal or contractual issues that could affect your plans.
Jackson LLP can conduct legal due diligence and review matters such as:
- Practice entity and ownership structure
- Employment and independent contractor agreements
- Payor and other third-party contracts
- Commercial leases and vendor agreements
- Patient records and privacy requirements
- Licensure and ownership requirements
- Intellectual property and practice branding
- Existing liabilities, disputes, or regulatory concerns
- Compliance policies and documentation
Our attorneys can identify issues that should be resolved before closing or addressed in the purchase agreement. We can also advise you on the proposed transaction structure and the terms that protect your interests as the buyer.
Selling a Healthcare Practice
Selling a practice requires you to consider your existing contracts, employees, patients, liabilities, and obligations after the sale.
Jackson LLP can assist practice owners with preparing for and negotiating a sale, including:
- Reviewing or preparing a letter of intent
- Structuring the sale of practice assets or ownership interests
- Preparing or reviewing the purchase agreement
- Identifying contracts that require consent before transfer
- Addressing employee and contractor agreements
- Reviewing lease and other contractual obligations
- Negotiating representations, warranties, and indemnification provisions
- Addressing liabilities that remain with the seller
- Structuring transition and post-closing obligations
- Reviewing restrictive covenants
Early legal review can identify issues that may delay the transaction or affect its value, allowing you to address them before the closing process is underway.
Structuring a Practice Sale or Purchase
The structure of a practice transaction determines what the buyer receives and which obligations or liabilities may transfer.
An asset purchase generally involves purchasing specified assets of the practice, including equipment, furniture, intellectual property, goodwill, and certain contractual rights. An ownership-interest purchase, also referred to as a stock purchase, involves acquiring an interest in the existing entity rather than purchasing selected assets.
Healthcare practices require additional consideration because state law may restrict who can own a professional entity or provide professional services through it. The transaction structure should account for those requirements from the beginning.
Jackson LLP can review the proposed structure and prepare or negotiate the agreements needed to document the sale or purchase.
MSO Practice Acquisitions
Some healthcare practice purchases involve a management services organization (MSO), particularly when a buyer plans to use an existing MSO structure or establish one as part of the transaction. These arrangements require careful attention to ownership, management responsibilities, compensation, and the separation between clinical and administrative functions.
Understanding what an MSO is and how it works with a healthcare practice can help you evaluate whether this structure fits the transaction. The relationship is generally governed by a management services agreement (MSA), which sets out the services provided by the MSO, the management fee, and the responsibilities of each entity.
The way money moves between the practice and MSO also matters. How money flows through an MSO can affect fee-splitting, fair market value, and other compliance considerations. Jackson LLP can review the proposed structure and agreements to identify issues before the transaction moves forward.
Contracts, Patients, and Practice Obligations
A practice’s contracts and relationships can be just as important as its physical assets.
Before a sale or purchase closes, the parties should determine which contracts will continue, which can be assigned, and whether third-party consent is required. Depending on the practice, this may include payor agreements, leases, employment agreements, independent contractor agreements, vendor contracts, and software agreements.
Patient records also require careful attention. The parties need an appropriate plan for transferring or maintaining records, protecting patient information, communicating changes to patients, and maintaining continuity of care. The specific requirements can vary based on the type of practice and applicable state law.
Jackson LLP can address these issues as part of the transaction so that legal and operational details are resolved before closing.
How Jackson LLP Can Assist With Your Practice Sale or Purchase
A practice sale or purchase can involve substantial money, long-term obligations, and professional responsibilities. A standard business purchase agreement may not address the legal issues specific to a healthcare practice.
Jackson LLP’s healthcare attorneys represent buyers and sellers of medical, behavioral health, therapy, veterinary, and other healthcare practices. Depending on your needs, our work may include:
- Reviewing transaction terms and letters of intent
- Conducting legal due diligence
- Advising on transaction structure
- Drafting or reviewing purchase agreements
- Negotiating representations, warranties, and indemnification
- Reviewing employment, contractor, lease, and other contracts
- Identifying assignment and consent requirements
- Addressing patient records and continuity-of-care issues
- Reviewing corporate and ownership requirements
- Preparing for closing and post-closing obligations
We serve healthcare professionals and practice owners in Illinois, California, New York, Texas, and Wisconsin. We begin with a free 15-minute consultation, followed by a written proposal and flat-fee pricing for most projects.
If you are considering buying or selling a healthcare practice, contact our attorneys before you sign transaction documents. Early review can give you a clearer understanding of the legal issues to address before closing.
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Frequently Asked Questions About Practice Sales and Purchases
Do I need a lawyer to buy or sell a healthcare practice?
A practice sale involves legal, contractual, ownership, and regulatory issues that may not arise in an ordinary business transaction. An attorney can review the transaction, conduct legal due diligence, and identify issues that should be addressed before closing.
What does due diligence involve when buying a healthcare practice?
Legal due diligence involves reviewing the practice’s corporate documents, contracts, employment arrangements, leases, compliance materials, liabilities, and other records relevant to the transaction. The goal is to identify legal issues that could affect the purchase or your obligations after closing.
What is the difference between an asset purchase and an ownership-interest (stock) purchase?
In an asset purchase, the buyer purchases specified assets of the practice. In an ownership-interest purchase, the buyer acquires an interest in the existing entity. The appropriate structure depends on the circumstances of the transaction and applicable healthcare laws.
Can I buy a healthcare practice if I am not a licensed physician or healthcare provider?
It depends on the type of practice, your professional credentials, the state involved, and the proposed structure. Some states restrict who can own entities that provide professional healthcare services. Jackson LLP can review the applicable ownership requirements and proposed transaction structure.
What happens to patient records when a practice is sold?
The parties need a legally appropriate plan for patient records, privacy, patient communication, and continuity of care. The requirements vary by type of practice and applicable law, and they should be addressed as part of the transaction.
When should I contact an attorney about buying or selling a practice?
Contact an attorney before signing a letter of intent or purchase agreement. Early legal review can identify ownership, contractual, compliance, and structural issues while there is still an opportunity to address them during negotiations.
Related Resources
Five key steps to evaluate a healthcare practice before making an offer or completing your purchase.
Learn how asset purchase agreements work, what they cover, and when they make sense for healthcare practices.
Understand valuation, deal structure, restrictive covenants, and regulatory issues before selling your healthcare practice to private equity.